Volkswagen Group posts year to date figures (Q1-3) with improved results.

Volkswagen Group records robust business performance in the first nine months

• Sales revenue rises to EUR 147.7 billion (EUR 145.7 billion)
• Operating profit improves to EUR 9.4 billion (EUR 8.6 billion) in ongoing difficult market environment
• Profit before tax up EUR 2.1 billion year-on-year at EUR 11.5 billion
• High net liquidity of EUR 16.8 billion in Automotive Division
• Outlook for 2014 confirmed

The Volkswagen Group reported a robust performance in the first nine months of 2014, despite the ongoing uncertain market environment. After three quarters, sales revenue was up only slightly year-on-year at EUR 147.7 billion (EUR 145.7 billion), being negatively impacted by exchange rate effects in the first half of the year in particular. 

Operating profit grew by 10 percent to EUR 9.4 billion (EUR 8.6 billion) despite persistently difficult framework conditions. The operating return on sales rose to 6.4 percent (5.9 percent). The Group's operating profit and sales revenue exclude the activities of the Chinese joint ventures, which are accounted for in the financial result using the equity method and are therefore not included in consolidated operating profit. The share of operating profit attributable to the Chinese joint ventures in the first nine months was EUR 3.9 billion (EUR 3.5 billion).

The Volkswagen Group's profit before tax amounted to EUR 11.5 billion (EUR 9.4 billion). The return on sales before tax rose to 7.8 percent (6.5 percent) in the period from January to September. Profit after tax was EUR 8.7 billion (EUR 6.7 billion). "We have turned in a solid performance in the year to date. However, we must continue to focus on laying the foundations now that will enable us to respond to the major technological and economic challenges facing the automotive industry. 

 To achieve this, we have successfully launched our "Future Tracks" program, which aims to sustainably increase our efficiency, flexibility and profitability, and make Volkswagen fit for the future", said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg on Thursday. The Volkswagen Group also confirmed its outlook for full-year 2014.

Global demand for passenger cars continued to rise in the course of the year, albeit at a slightly slower pace; however, the markets varied from region to region. The primary growth drivers were the Asia-Pacific region, North America, Western Europe and Central Europe. In South America and Eastern Europe, new passenger car registrations were much lower than in the prior-year period. "We expect that the markets will continue to see mixed trends in the remainder of the year. This environment is dominated by political and economic uncertainty and demands maximum flexibility and financial strength on our part. Our disciplined cost and investment management, as well as the continuous improvement of our processes – underpinned by our Group wide future and efficiency orientated program "Future Tracks" – will remain core elements of our Strategy 2018 so that we can achieve our long-term profitability targets and strategic goals", said CFO Hans Dieter Pötsch.

High net liquidity in the Automotive Division

Net liquidity in the Automotive Division amounted to EUR 16.8 billion at the end of September (December 31, 2013: EUR 16.9 billion). Investments in property, plant and equipment, investment property and intangible assets (capex) in the Automotive Division remained virtually unchanged at EUR 6.5 billion (EUR 6.4 billion). The Volkswagen Group maintained its disciplined approach to investment with a ratio of capex to sales revenue in the Automotive Division of 5.0 percent (5.0 percent). Investments were made primarily in production facilities and in the models to be launched in 2014 and 2015, as well as in the ecological focus of the model range.

Brands and business fields

The Volkswagen Passenger Cars brand recorded an operating profit of EUR 1.7 billion (EUR 2.1 billion) in the first nine months of 2014. Operating profit was negatively impacted by lower volumes, negative exchange rate effects in the first half of the year and higher upfront expenditures for new technologies, while lower material costs and improvements in the mix had a positive effect. It should be noted that this figure does not include the Chinese joint ventures. The operating margin reached 2.3 percent (2.9 percent) in the reporting period. The Volkswagen Passenger Cars brand has launched an efficiency program in order to reach its target operating return on sales of over 6 percent by no later than 2018.

Audi's operating profit was up slightly on the previous year, at EUR 3.8 billion (EUR 3.7 billion). Earnings growth was lifted by increased volumes and lower material costs, while high upfront investments in new products and technologies, as well as in the expansion of the international production network, had an adverse effect. The operating margin was

9.7 percent (10.1 percent).

ŠKODA generated an operating profit of EUR 651 million (EUR 371 million) in the first nine months of 2014, significantly exceeding the prior-year figure thanks to volume and mix-related factors. The operating margin was 7.4 percent (5.0 percent).

SEAT's operating loss narrowed to EUR 82 million (EUR 93 million) on the back of positive effects from volumes, mix and material costs.

Bentley's operating profit climbed year-on-year to EUR 125 million (EUR 98 million), and its operating margin was 9.9 percent (9.2 percent).

Porsche recorded an operating profit of EUR 1.9 billion (EUR 1.9 billion) and an operating margin of 15.7 percent (18.2 percent). Higher volumes had a positive effect on earnings while increased development costs and higher fixed costs had an adverse impact.

Operating profit at Volkswagen Commercial Vehicles rose to EUR 378 million (EUR 342 million). The operating margin was 5.4 percent (4.9 percent).

Scania posted an operating profit of EUR 700 million (EUR 691 million) and an operating margin of 9.3 percent (9.4 percent). MAN generated an operating profit of EUR 304 million (EUR 47 million) and an operating return on sales of 3.0 percent (0.4 percent).

Volkswagen Financial Services recorded an operating profit of EUR 1.2 billion in the first nine months of 2014, up on the previous year (EUR 1.1 billion). The division signed 3.6 million new financing, leasing and service/insurance contracts worldwide (+ 18.0 percent).

Winterkorn: "We are in a position to reach the ten million deliveries mark this year."

The Volkswagen Group will continue to press ahead with its new product initiative across all brands in the remaining months of 2014, modernizing and expanding its offering by introducing attractive new vehicles. Volkswagen is expecting a moderate increase in deliveries to customers in fiscal year 2014. "We are in a position to reach the ten million deliveries mark this year", said Winterkorn. Challenges for the Group will come from the difficult market environment and fierce competition, as well as interest rate and exchange rate volatility and fluctuations in raw materials prices. Volkswagen believes that the modular toolkit system, which is being continuously expanded, will have an increasingly positive effect on the Group's cost structure.

"Given the Group's current performance, I am convinced that we will meet our goals for fiscal year 2014", said Winterkorn. Depending on economic conditions, Volkswagen is expecting 2014 sales revenue for the Group and its business areas to move within a range of 3 percent around the prior-year figure. In terms of the Group's operating profit, Volkswagen is forecasting an operating return on sales of between 5.5 percent and 6.5 percent in 2014 in light of the challenging economic environment, and the same range for the Passenger Cars Business Area. The Group expects the Commercial Vehicles/Power Engineering Business Area to moderately exceed the 2013 figure. Volkswagen anticipates an operating return on sales of between 8.0 percent and 9.0 percent in the Financial Services Division.

The complete interim report is published on our website at:

	2014	2013	%	2014	2013	%
	Q3	Q3		9M	9M
Volume Data1
Deliveries to customers
('000 units)	2,476	2,386	+ 3.8	7,542	7,183	+ 5.0
Vehicle sales ('000 units)	2,439	2,368	+ 3.0	7,646	7,241	+ 5.6
Production ('000 units)	2,404	2,347	+ 2.4	7,638	7,232	+ 5.6
Employees
('000 at Sept. 30/Dec. 31)				590.8	572.8	+ 3.1
Financial Data
(IFRSs), EUR million
Sales revenue	48,910	46,985	+ 4.1	147,718	145,673	+ 1.4
Operating profit	3,230	2,777	+ 16.3	9,416	8,557	+ 10.0
as a percentage of sales revenue	6.6	5.9		6.4	5.9
Profit before tax	3,713	2,780	+ 33.6	11,490	9,399	+ 22.2
as a percentage of sales revenue	7.6	5.9		7.8	6.5
Profit after tax	2,971	1,909	+ 55.6	8,687	6,702	+ 29.6
Automotive Division2
Cash flows
from operating activities	6,556	6,281	+ 4.4	14,942	14,713	+ 1.6
Cash flows from investing activities
attributable to operating activities3	3,929	3,063	+ 28.3	9,398	10,264	– 8.4
of which: capex	2,904	2,512	+ 15.6	6,482	6,436	+ 0.7
as a percentage of sales revenue	6.8	6.0		5.0	5.0
Net cash flow	2,627	3,218	– 18.4	5,544	4,449	+ 24.6
Net liquidity
at Sept. 30				16,785	16,649	+ 0.8
Net liquidity
at Sept. 30/Dec. 31				16,785	16,869	– 0.5

1 Volume data including the unconsolidated Chinese joint ventures. All figures shown are rounded, so minor discrepancies may arise from addition of these amounts. Deliveries for 2013 have been updated to reflect subsequent statistical trends.

2 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.

3 Excluding acquisition and disposal of equity investments: Q3 EUR 3,845 million (EUR 3,259 million), Q1–3 EUR 9,694 million (EUR 8,624 million).